Number 178 SB 21 ALASKA MARINE HIGHWAY AUTHORITY  CHAIRMAN GREEN brought SB 21 before the committee as the next order of business. JOE AMBROSE , staff to Senator Robin Taylor who is the prime sponsor of SB 21, directed attention to a proposed Amendment No. 3. (Amendments one and two were adopted at the previous hearing on the bill.) SENATOR WARD moved adoption of the following Amendment No. 3. SENATOR DUNCAN objected and asked for an explanation of what the amendment does. SENATOR WARD moved adoption of the following Amendment No. 3: Amendment No. 3 Page 16, lines 12 - 16: Delete "In this subsection, "commissioner of the department that operates the marine vessel" includes the president of the University of Alaska with regard to a vessel operated by the university and the chief executive officer of the Alaska Marine Highway Authority with regard to a vessel operated by the Alaska Marine Highway Authority."  Insert "A detailed list of the costs and factors considered in calculating the interport differential must be provided to each person who expresses an interest in submitting a bid to perform maintenance or repair work on a marine vessel owned by the state. [IN THIS SUBSECTION, "COMMISSIONER OF THE DEPARTMENT THAT OPERATES THE MARINE VESSEL" INCLUDES THE PRESIDENT OF THE UNIVERSITY OF ALASKA WITH REGARD TO A VESSEL OPERATED BY THE UNIVERSITY.]" Page 16, line 18, through page 17, line 1: Delete all material and insert: "(c) The commissioner of a department that operates a marine vessel shall adopt regulations establishing the criteria that the department shall use to determine whether the cost of maintenance or repair work at a shipyard facility located int he state is reasonable under (a) of this section. The commissioner shall designate by regulation the designated base port for each vessel operated by the department. A vessel's designated base port is the vessel's delivery and redelivery port. The Alaska Marine Highway Authority shall adopt regulations establishing the criteria that the authority shall use in calculating the interport differential under this section. The criteria for calculating the interport differential must include costs incurred from the time that the vessel leaves the vessel's designated base port to enter the shipyard facility until the time the vessel returns to the designated base port from the shipyard facility. (d) In this section, (1) "commissioner of the department that operates the marine vessel" includes the president of the University of Alaska with regard to a vessel operated by the university and the chief executive officer of the Alaska Marine Highway Authority with regard to a vessel operated by the Alaska Marine Highway Authority; (2) "interport differential" includes all costs related to the performance of the maintenance or repair work of a marine vessel at a shipyard located outside of the state, including travel costs incurred moving the vessel from its designated base port to the shipyard outside of the state; additional fuel consumption; cost of consumable including lubricants and other engine and deck stores; maintenance costs incurred during running time; cost of crew transfers including airfare between Alaska and the shipyard; wages in travel status; crew room and board; and other interport costs identified by the Alaska Marine Highway Authority." Number 200 MR. AMBROSE , speaking to Amendment No. 3, explained there has been discussion with DOTPF on a provision in the legislation that deals with the use of Alaska shipyards, and he believes the new language in the amendment is less onerous. He said the intent throughout this process is to make use of the two shipyards, which the state of Alaska has spent a tremendous amount of money on, a little more practical. Mr. Ambrose said a major change being made in the amendment requires that the commissioner, by regulation, designate a base port for each vessel, and that base port then becomes the delivery and redelivery port for the vessel. He said the delivery and redelivery port is important because that is the point of calculation for the interport differential when a vessel is shipped out of state. Federal highway authorities have indicated that in order to use that calculation all the time, there has to be a delivery and redelivery port. The second change is the defining of "interport differential" which is all costs related to moving a vessel to an out-of-state shipyard. Number 325 GARY HAYDEN , Director, Alaska Marine Highway System, Department of Transportation & Public Facilities, stated the Marine Highway System has demonstrated a commitment to doing work in Alaska shipyards. Over the last seven years, most of the work that did not involve federal funds has been done in Alaska. When federal funds are involved, it necessitates going out to bid on these projects. Mr. Hayden questioned the need for the amendment because he wasn't sure there was a problem at this point in time. He referenced a Legislative Budget & Audit Committee report where it stated they found the method used by DOTPF in determining the interport differential for bidding purposes to be sound and based upon a logical approach for determining vessel transport related costs. He also suggested that if a Alaska Marine Highway Authority is going to be established, maybe a good approach to this issue is to let its board of directors and executive director make the decision has to how they go out and put together their bidding package on getting their ships maintained. Mr. Hayden said there is definitely an issue of declining maintenance funds, while at the same time, the ships are getting older and the cost of maintenance is going up. His approach to getting the most possible out of the maintenance dollars has been to have competition and get good prices on the work that is being done. Mr. Hayden explained that in calculating the interport differential it starts at the point that the vessel is taken off line. Juneau, Ketchikan and Seward are currently designated the home ports for the vessels, but the home port designations are just for the purpose of crew changes. He questioned designating a base port in regulation because it ties the system's hands as to where they take the vessel off a revenue run. The past practice has been to take it off at the end of the revenue run, and then that would be the start of their calculations. Number 410 MR. AMBROSE pointed out that nothing in the amendment would affect the competitive bidding process, and nothing in the bill is intended to give the Alaska shipyards so much of an advantage that bids would be awarded that were not fair to the state as far as expense is concerned. Number 430 There being no further objection to Amendment No. 3, it was adopted. CHAIRMAN GREEN asked for the will of the committee on CSSB 21(STA). SENATOR WARD moved CSSB 21(STA), as amended, be passed out of committee with individual recommendations. SENATOR DUNCAN objected and stated he was concerned about this piece of legislation. The roll was taken with the following result: Senators Ward and Green voted "Yea" and Senator Duncan voted "Nay." CHAIRMAN GREEN stated the motion to move CSSB 21(STA) out of committee failed.